How endowment donations grow with investment returns

By Felix Salmon
September 1, 2009
Cooper Union:

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I never understood, when the Harvard and Yale endowments were making gazillions of dollars a year in profit, why anybody would donate any money to them: any growth in the endowment due to donations would be dwarfed by investment gains. But it turns out that alumni don’t think that way, either at Harvard and Yale or at Cooper Union:

One additional benefit of Cooper Union’s returns has been that donations to the college have increased as its endowment has grown, a phenomenon that Yale and Harvard experienced in the boom years.

I’m happy this is happening at Cooper Union, whose endowment is less than $1 billion and has been invested very well. But I don’t really understand why this correlation should hold even unto endowments with more than $30 billion under management.

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